Klobuchar: Oil industry should follow lead of biofuels industry

U.S. Sen. Amy Klobuchar urged the petroleum industry to embrace the same reduction in tax credits and subsidies that the ethanol industry has agreed to as part of a compromise hammered out by Sens. Dianne Feinstein, D-Calif., John Thune, R-S.D., and Klobuchar last week. Although certain tax credits would be extended, if passed, this agreement would immediately repeal the Volumetric Ethanol Excise Tax Credit and tariff.

“Big oil companies have enjoyed tax breaks that have produced record profits and American taxpayers have shouldered these costs for too long,” said Klobuchar. “The ethanol industry came to the table and offered up over a billion dollars in savings to reduce the deficit and supported a compromise that is a model for reducing government subsidies going forward. Now it is time for the oil industry to do the same.”

Klobuchar made the remarks during a speech on the floor of the U.S. Senate July 12. The compromise would reduce the debt by $1.3 billion and “represents a good-faith effort to improve energy policy under very difficult economic times,” she said. “At a time of bitter budget debates and entrenched positions, we worked together to find common ground and we took a step in the right direction.

Meanwhile, in the last decade alone, oil companies have raked in nearly $1 trillion in profits while also benefiting from tax incentives projected to cost the U.S. $50 billion in the next 10 years. Some of the subsidies to the oil industry have been in place for more than 100 years. “It is a question about whether the mature oil industry should continue to receive billions in subsidies at a time when their profits are up 30 percent in the first quarter of 2011,” she said. “I'm not against drilling at all. I'm pleased about what's going on in North Dakota right to our west. But when I look at what's happening with this debt right now, we have to be smart about this and this is clearly one place to look for savings.”

“It is a question about whether a hugely profitable industry should continue to enjoy lucrative tax advantages at a time when our nation can least afford it,” she added. “With oil prices much higher than actual costs, the oil industry doesn't need extra money from the government. We must get serious about tackling the deficit and putting our country back on sound fiscal grown.”

The debt problem won’t just fix itself. She referenced a report from the National Commission on Fiscal Responsibility that said that modest sacrifices the U.S. isn’t willing to make today will only force larger sacrifices of hope and opportunity on the next generation. “A relatively small industry like ethanol is willing to put two-thirds of its tax breaks on the table for deficit reduction immediately,” she said. “The much larger and much more profitable oil industry can certainly afford to do the same, if not more.”